In defence of price gouging

In the wake of Hurricane Sandy there is concern that people may be price gouging. Gov.?Chris?Christie has said he will come down hard on culprits caught price gouging.

During emergencies, New Jerseyans should look out for each other ? not seek to take advantage of each other. The State Division of Consumer Affairs will look closely at any and all complaints about alleged price gouging. Anyone found to have violated the law will face significant penalties.

Mark J. Perry, though, schools the?governor?on market dynamics:

With that statement, the New Jersey governor demonstrated a fundamental lack of understanding about how markets actually work. ?Sellers?always?try to take advantage of consumers, in the sense that they always charge ?whatever the market will bear,? and this condition of a well-functioning market doesn?t change because of a natural disaster.

Just like earthquakes, hurricanes, or floods don?t change the fundamental physical laws of gravity or aerodynamics, those natural disasters also don?t change the basic laws of supply and demand. ?If sellers of electric generators in New Jersey are guilty of illegal ?price gouging? for charging market prices after a major disruption to the market like Hurricane Sandy, then sellers of all products at all times are guilty of ?price gouging.? Sellers always charge ?whatever the market will bear,? and in that sense are always trying to ?gouge? and ?take advantage of? buyers to the maximum extent possible. ?To act any differently would be foolish and even disruptive to our economic system based on market prices.

I?m very confident that the last time Governor Christie personally sold one of his own homes, shares of stock, or cars, he sold his possessions for the highest price possible and not a penny cheaper, and in the process he did his very best as a seller to ?take advantage? of the buyer.? That?s how markets function.

Rising, market-based prices?following a disaster?are the most effective method possible of allocating scarce resources, eliminating shortages, and attracting essential supplies to the areas that need them the most. ?In fact, market-based prices are also the most effective method possible of allocating scarce resources, eliminating shortages, and attracting essential supplies to the areas that need them the most?before a disaster?? wind and rain don?t change that reality.? Governor Christie and others fail to recognize that the coordinating role of market prices becomes even more important following a disaster, not less important.? To prevent the price system from operating following a disaster with price gouging laws will make the situation worse, not better.? Thanks to the strict enforcement of their state?s price gouging laws, New Jerseyans should expect possible shortages of fuel, food and generators.

It?s only in the fantasy world of politics that the ?anointed elected officials? think they get to be the ?price deciders,? and determine if sellers are guilty of ?price gouging.? In the real world of the marketplace it?s much different and much more democratic ? the impersonal market forces of supply and demand become the ?price deciders,? and we?re all much better off with those market-determined prices than with the artificial prices determined by politicians and bureaucrats.


Herald Hypocrisy

I love calling out Repeaters and especially when their editorial message is confused at best to just so egregiously wrong it warrants a smacking.

NZ Herald Editorial, 22 January 2010 – Three strikes law deserve the death sentence

“Imprisonment is not the most effective way of reducing recidivism, and building prisons is not the best use of taxpayer dollars.”

Ok we get it, putting people isn’t working says “FIGJAM” Power the NZ Herald Editor.

NZ Herald Editorial, 28 January 2010 – Why corporate cheats need the threat of jail

“The possibility of imprisonment would introduce a significant deterrent.”

Mmmmm-o-kay, Colour me confused. In the space of just six days the Herald has jail doesn’t stop recidivism when everyone knows that? crim locked up doesn’t commit anymore crimes while he is on the inside and then today they say that jail will stop recidivist Corporate Cheats.

Maybe FIGJAM Power the NZ Herald Editor“FIGJAM Power” got his messages confused, or perhaps the stress of being the most competent minister? and New Zealand’s next Top Prime Minister is getting to him.

You know the problem with liberal panty-waists and people without principles is that they never actually stand for anything. Then they try and weasel their way around the masses of contradictions their everyday utterance vomit forth.

In this case it is pointless giving new detention powers when everyone in business knows that it the sheer indolence of the Commerce Commission and their unwillingness to use any lead in a pencil that is the problem with our regulatory environment not the penalties.

Simon “FIGJAM” Power cites cartels as willfully ignoring the law. Well they will when they don’t even fget investigated by the wombles at ComCom.